US consumers’ EXCLUSIVE watchdog to step up credit card enforcement, could revise fee caps


Signage is seen at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, DC, U.S., May 14, 2021. REUTERS/Andrew Kelly

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WASHINGTON/NEW YORK, April 7 (Reuters) – The U.S. consumer watchdog plans to step up enforcement action against lenders who illegally charge credit card late payment fees and may rewrite its rules that set thresholds for these fees, according to two people directly involved. knowledge of the subject.

The development marks an escalation of a wider crackdown by the Consumer Financial Protection Bureau (CFPB) on what it calls ‘junk fees’, a catch-all for overdrafts, credit card late payment fees , NSF check fees and other charges.

Banks and credit unions took in more than $15 billion in overdraft and related fees in 2019 and $12 billion in late credit card fees in 2020, according to CFPB estimates.

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Agency director Rohit Chopra says lenders have become too reliant on the fee. He also said the fees seemed excessive, non-transparent to consumers, and in many cases were penalties rather than compensation for a legitimate service.

In January, the CFPB issued a request for public comment on how banks and businesses charge these fees and the impact they have on American families, with a deadline of April 11. The agency has not yet specified how it intends to proceed. Read more

One of the sources said the agency would look into the comments, but would take a tougher line on enforcing these fees and would have to rewrite some rules.

Card issuers typically charge late payment fees when a customer exceeds the minimum payment term. The current rules contain a legal safe harbor that allows lenders to charge late fees provided they do not exceed a “reasonable and proportionate” regulatory cap that is set annually by the CFPB.

The agency plans to rewrite the rules for calculating this threshold, according to the two sources.

The CFPB is also exploring how it can pursue more enforcement action for potentially illegal charges under the Credit Card Accountability and Disclosure Act 2009, which protects consumers from unfair practices by credit card issuers. credit, the sources added.

“Each year, unwanted fees hit millions of Americans with expenses they didn’t expect and didn’t consider when choosing their financial institution,” Brian Shearer told Reuters. senior adviser to the CFPB, in a statement, without commenting on the agency’s plans.


The banking industry has launched a united defense against the scrutiny of Chopra’s ‘junk fees’, saying most lenders aren’t too reliant on fee revenue and that the CFPB is wrong to suggest that lenders hide fees or that the fees show that the banks do not offer competitive services.

The Consumer Bankers Association (CBA) and the American Bankers Association, among other groups, are preparing comment letters highlighting the multitude of existing rules requiring banks to disclose these fees, according to two other industry executives.

Creating these rules required the government to conduct extensive focus group testing, an expensive process that the CFPB says is not worth repeating, they argue. They add that overdrafts and other loan products are essential services for most Americans.

“Major U.S. banks have always listened to their customers and are taking proactive steps to help them avoid unexpected charges while protecting their access to a much-needed emergency safety net,” said CBA Chief Executive Richard Hunt. .

Several major banks recently changed their policies on overdraft and insufficient funds (NSF) fees – penalties charged when a customer bounces a check or automated payment.

JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N), Citigroup Inc (CN) and Wells Fargo & Co (WFC.N), which declined to comment for this story, said they would stop to charge NSF fees and have changed their policies on charging overdraft fees. Read more

The industry says these changes show banks are trying to compete on these fees.

“Recent overdraft fee announcements by some of the biggest banks show that real change is possible, and we’ll continue to push to increase competition and save Americans money,” Shearer said of the CFPB.

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Reporting by Katanga Johnson in Washington and Elizabeth Dilts Marshall in New York Editing by Michelle Price and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.


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